INITIAL CLAIMS: THE POSITIVE STREAK CONTINUES

Takeaway: Looking past the Easter-driven seasonality, this morning marks the fifth week in a row of strong data initial claims data.

Labor Continues to Improve

Easter week is notoriously choppy from a data standpoint so investors should take the single-week seasonally-adjusted initial claims data with a grain of salt. In fact, in the past decade, the average w/w change has been +20k, which is more or less in-line with the 25k increase seen this week. Our preferred method remains looking at the rolling NSA claims on a y/y basis. On that measure, the level of newly unemployed Americans was lower by 11% year-over-year, which was slightly worse than the prior week's 12% decline, but still a very strong rate of y/y improvement. Since the start of 2014, that's the second fastest rate of improvement we've seen, eclipsed only by the previous week's 12% figure. The data in hand so far continues to bode well for the April NFP jobs report due out next Friday, May 2.

The Data

Prior to revision, initial jobless claims rose 25k to 329k from 304k WoW, as the prior week's number was revised up by 1k to 305k.

The headline (unrevised) number shows claims were higher by 24k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 4.75k WoW to 316.75k.

The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -11.0% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -12.0%

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Yield Spreads

The 2-10 spread was unchanged at 226 bps. 2Q14TD, the 2-10 spread is averaging 230 bps, which is lower by -9 bps relative to 1Q14.

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Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT